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Real production and real income growth over the COVID-19 pandemic

Author

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  • Sean Clarke
  • Ryan Macdonald

Abstract

During the COVID-19 pandemic, real consumption and real gross fixed capital formation (GFCF) grew at a stronger pace than real gross domestic product (GDP). Typically, real consumption and real GFCF are expected to progress similarly to real GDP, making the pandemic period unusual. This article illustrates how examining real income rather than real production can address this paradox. Specifically, the roles of changes in production (the use of capital, labour and multifactor productivity to produce real GDP) and changes in non-production sources of real income growth (the trading gain and net income from abroad) are examined. The results show that the terms of trade were a major source of real income growth that supported consumption and GFCF beyond what changes in production would suggest.

Suggested Citation

  • Sean Clarke & Ryan Macdonald, 2023. "Real production and real income growth over the COVID-19 pandemic," Economic and Social Reports 202300400004e, Statistics Canada, Analytical Studies and Modelling Branch.
    • Handle: RePEc:stc:stcp8e:202300400004e
    DOI: https://doi.org/10.25318/36280001202300400004-eng
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    References listed on IDEAS

    as
    1. Ryan Macdonald, 2010. "Real Gross Domestic Income, Relative Prices, And Economic Performance Across The Oecd," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(3), pages 498-518, September.
    2. Michael Francis, 2008. "Adjusting to the Commodity-Price Boom: The Experiences of Four Industrialized Countries," Bank of Canada Review, Bank of Canada, vol. 2008(Autumn), pages 31-43.
    3. Macdonald, Ryan, 2010. "Real Gross Domestic Income, Relative Prices and Economic Performance Across the OECD," Economic Analysis (EA) Research Paper Series 2010059e, Statistics Canada, Analytical Studies Branch.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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